As natural rubber production is rising and consumption falling, as per the Rubber Board’s December data, prices are expected to decline. The production of natural rubber in the country is showing an increasing trend. It increased in December after registering a 19 per cent rise in November. Production in November was 63,000 tonnes against 53,000 tonnes in the year ago month.
According to the data released last week, the production surged 12 per cent in December against the same month of 2015. India is the world’s second-biggest cons­umer and the fifth-largest pr­oducer of rubber. In the 2014-15 crop year, 655,000 tonnes of rubber was produced.
Increase in production in April-December 2016 against the same period of last year is over 12 per cent. Total production in FY17 up to De­cember was 493,000 tonnes against 440,000 tonnes in the year ago period. If the trend continues, production in FY17 could reach the anticipated 654,000 tonnes.
On the other hand, consumption in December decreased by 0.3 per cent to 85,000 tonnes against 85,250 tonnes in December 2015.
Commerce and industry minister Nirmala Sitharaman January 23 launched an online system for rubber growers, which would help them reduce the production cost and enhance productivity. The rubber soil information system (RubSIS) is an online system for recommending appropriate mix of fertilisers for specific plantations, depending upon the nature of soil, the ministry said.
RubSIS has been develo­ped by the Rubber Research Institute of India under Rub­b­er Board in collaboration with the Indian Institute of In­f­o­r­m­ation Technology and Ma­n­a­gement, Kerala, and the Na­tional Bureau of Soil Sur­vey & Land Use Planning, ICAR.
The ministry said it’s a cost effective tool for sustainable and scientific management of rubber growing soils. Apart from preventing indiscriminate use of chemical fertilisers and soil degradation, RubSIS will help reduce the cost of production, increase productivity and lower in environmental pollution. Lau­nched in Kottayam (Kerala), the largest rubber gro­wing district of India, RubSIS will be extended to the entire rubber growing region in Kerala and Tamil Nadu this year.
Meanwhile, another important factor that could bring down prices of rubber could be the tieup between Reliance Industries and Russian petrochemical giant Sibur to set up South Asia’s first butyl rubber halogenation unit at Jam­na­gar in Gujarat. The MoU was signed during the Vibrant Gujarat Summit in Gandh­in­agar, RIL had said in a statement on January 18 without giving investment details.
The unit, to be set up at RIL’s integrated petrochemical site in Jamnagar, “will produce 60,000 tonnes of halogenated butyl rubber every year under Reliance Sibur Elastomers (RSEPL), a joint venture in which RIL owns 74.9 per cent and Sibur 25.1 per cent”, it said.
Halogenated butyl rubber is used to manufacture tubeless tyres. Apart from the planned halogenation unit, the joint venture owns a 120,000-tonne per annum butyl rubber plant, currently under construction at the same venue. It will provide the butyl rubber feed to the halogenation unit.
Nikhil Meswani, executive director, RIL, said, “RSEPL’s halogenated butyl rubber plant will be well-poised to capitalise on the significant surge in regional demand in tyre and pharmaceutical industries.” It is expected to be complete in 2018. India, he said, is expected to see a qua­n­tum jump in tyre output, with domestic and international tyre majors lining up Rs 15,000 crore of investment.
“The halogenated butyl rubber demand is expected to grow at 8-10 per cent CAGR over the next few years, driven by increasing customer preference for tubeless tyres in India and neighbouring countries, and significant investments in manufacturing of pharmaceutical closures and tank inner liners,” he said.
Supply of rubber started easing in 2014. Worldwide rubber production grew at a slower pace as the prolonged drops in prices caused producers to limit expansion plans. Production in 2015 was 12.3 million tonnes, up by 1.2 per cent over the previous year. Rubber consumption declined 0.3 per cent to 12.1 million tonnes in 2015. The decrease was due to fall in China, Japan and India because of economic slowdown, according to a research report by Thailand’s Tris Rating.
Quoting the International Rubber Study Group, Trsi Rating said production in 2016 and 2017 is expected to rise moderately to 12.4 million tonnes and 12.8 million tonnes, respectively. The persistently low prices will keep pressuring producers to reduce production. Rubber usage is forecast to grow to 12.3 million tonnes in 2016 and 12.7 million tonnes in 2017.
prabhudatta.m@mydigitalfc.com